Answer:
Missing word at inception of the question <em>"Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 140000 liters at a budgeted price of $375 per liter this year. The standard direct cost sheet for one liter of preservative follows: Direct materials (2 pounds at $24) $48 Direct labor (0.5 hours at $64) $32"</em>
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a
. Direct Material Price Variance = (Actual Qty * Std. Price) - (Actual Qty * Actual Price)
= (216,000 * $24) - ($ 5,268,000)
= $5,184,000 - $5,268,000
= $84,000 U
Direct Material Efficiency Variance = (Actual Qty - Std. Qty) * Std. Price
= (216,000 – 280,000) * $24
= -64,000 * $24
= $1,536,000 U
b. Direct Labor Price Variance = (Actual Hrs * Std. Rate) - (Actual Hrs * Actual Rate)
= (60,400 * $ 64) - ($ 4,010,000)
= $3,865,600 - $4,010,000
= $144,400 U
Direct Labor Efficiency Variance = Std. Rate *(Std. Hrs - Actual Hrs)
= $ 64 * (70,000 - 60,400)
= $614,400 F
c. Variable OH Price Variance = (Std. Hrs * Std. Rate) - (Actual Variable OH)
= (70,000 * $220) - 1,398,000
= $ 15,400,000 - $13,980,000
= $1,420,000 F
Variable OH Efficiency Variance = (Std. Hrs - Actual Hrs) * Std. Rate
= (70,000 - 60,400) × $ 220
= $2,112,000 F
<u>Workings</u>
Standard Qty = 140,000 litres × 2 Pound per litre = 280,000 pounds
Standard Hrs = 140,000 litres × 0.5 hrs per litre = 70,000 hrs
